Monetizing Digital Structure

In the last year or two there has been an explosion of massive online open courses (MOOCs).  These have come from a wide assortment of institutions. To date there has been tremendous experimentation but business models are still forming. As Cisco’s executive director for AsiaPac Andrew Thomson recently suggested one potential business model “could be that the content could become free, but you pay for the credential.”

MOOCs are essentially the mass digitization (and democratization) of education. In many ways, it is unfolding in the same way other “digitizations” have occurred. Namely, distribution and content are being commoditized which is drastically lowering the market price. However, a significant portion of education is the relevant signal.  So while digitization is commoditizing the content, the signal remains important.

By providing structure to something that is relatively unstructured – in the case of education an exam, a certification, or a degree – institutions are able to continue to monetize content that is increasingly being commoditized.

Most of the to-date successful web properties have built their success off of providing structure to relatively unstructured bits.  This is definitely the model of Google who has so far done certain aspects of that structuring better than others.  App stores create structure.  Amazon provides structure. If you look around, you’ll note the companies that have provided structure as their industries have digitized have found the most success and have been able to remain relevant.

At the root -this is the battle currently underway between traditional analog/physical players and their digital counterparts. This is what has unfolded with music, video, books, and now education. And because digital bits scale extremely well, companies operating in the digital environment can garner 90+ percent of a market.